On April 15, 2019, the Internal Revenue Service (“IRS”) announced that it had just completed a two-week educational campaign focusing on employment tax issues. According to the IRS’s release, it dispatched Criminal Investigation (“CI”) agents to nearly 100 businesses that were showing signs of potential serious noncompliance. During these visits, business owners were informed about ways to catch up with back payroll taxes. During these meetings, the CI agents discussed how to stay current and the potential for civil and criminal penalties. The IRS also announced that, over those two weeks, it had taken several dozen legal actions against potential employment tax violators, including indicting twelve individuals and executing four search warrants. The IRS said that federal courts imposed criminal sentences in six cases in which defendants were convicted of crimes involving payroll tax violations. Continue reading “The IRS Announces Conclusion of Two-Week Campaign Focused on Employment Tax Compliance”
The Consumer Product Safety Act requires manufacturers, importers, and distributors of consumer products to report hazardous defects. Failure to comply can subject the individual officers and employees to criminal penalties.
On March 28, 2019, two California executives were indicted for failing to disclose defects with their dehumidifiers, despite multiple reports showing the product could catch fire easily. In United States v. Simon Chu and Charley Loh, 19-CR-00193 (C.D. Cal.), defendants Simon Chu and Charley Loh were charged with conspiracy to commit wire fraud, failing to furnish information under the Consumer Product Safety Act (“CPSA”), and defrauding the U.S. Consumer Product Safety Commission (“CPSC”), while executives of two unindicted and unnamed co-conspirator companies. The indictment also charges the individual defendants with one count of wire fraud and one count of failure to furnish information under the CPSA.
Chu and Loh are alleged to have known as early as 2012 that the Chinese dehumidifiers that they imported and sold were defective and could catch fire. According to the indictment, in July 2012, the two men received a video from a consumer showing a burning dehumidifier. They later tested the plastic used in their products and found that, not only did the plastic burn, but the materials used did not meet safety standards. Nevertheless, Chu and Loh continued to sell the dehumidifiers, and withhold information about the defects, to avoid the costs of a recall. Continue reading “The Justice Department Brings Its First-Ever Prosecution of Corporate Officers for Criminal Violations of the Consumer Product Safety Act”